Economic employer check (tool)

Check whether cross-border employees become taxable due to their physical presence and working activities in the Netherlands when working for a Dutch (group) entity.

Scope of this tool

This tool is meant for employees (not board members), who live in a tax treaty country and temporarily work in the Netherlands for a Dutch entity (and not a permanent establishment). As cross border employment is a complex and dynamic area much depending on precise facts and circumstances, no liability is assumed for the use and content of this helpful tool in determining the initial tax implications of short term assignments.

Is the above applicable to your situation?

Yes

No

Conclusion: this tool is not applicable to your situation

There can be various reasons why this tool is not fitted to your situation. The employee may, for instance, live in a country with whom the Netherlands have not concluded a tax treaty with. Or, the employee is working for a permanent establishment. In these cases, different rules apply. If you need further advice, please contact us.

How much time is spent or worked in the Netherlands?

Over 183 days (of physical presence)

Less than 61 workdays

Less than 183 days (of physical presence) and more than 60 workdays

Days of physical presence must be counted within a 12 month period, tax or calendar year (depends on tax treaty); a part of a day, even when brief, is a day (unless in transit). Workdays are days in which work is performed in the Netherlands. For answering the below questions, please consider the number of workdays within a 12 month period.

Conclusion: Dutch tax liability due to exceeding 183 days

The employee is taxable in the Netherlands for the employment income that is attributable to physical Dutch workdays regardless whether the Dutch entity qualifies as material and economic employer. The formal (foreign) employer may have a Dutch wage tax withholding requirement. This is usually true in case of intra-company assignments where the employee is working under the supervision of the Dutch entity. The Dutch group entity can take over the wage tax withholding requitement.
Note that besides personal tax implications, there could be implications for immigration, social security, labour law, corporate income tax and/or VAT.
If you need further advice, please contact us.

Select the specific context in which the assignment takes place.

Intra-company exchange program

Intra-company career development

Specific expertise (e.g. annual salary higher than € 36,889, or specific specialist knowledge not available within the Dutch entity)

Other

If the employee is not assigned within an intra-company context, please select 'Other'. Intra-company in this context means that there is at least a direct or indirect interest of 33.33% between the Dutch (receiving entity) and foreign entity (formal employing entity).

Conclusion: no Dutch tax liability due to 60 days rule

The employee is not taxable in the Netherlands based on official guidelines, better known as the 60 days rule. As there is no tax liability, the Dutch entity has no wage tax withholding requirement. For completeness' sake, note that if the employee is not taxable in the resident country, the Dutch tax authorites may consult with the tax authorities of the residence country.
Note that besides personal tax implications, there could be implications for immigration, social security, labour law, corporate income tax and/or VAT.
If you need further advice, please contact us.

Is the employee working under power of authority of the (receiving) Dutch entity?

Yes

No

It is not so much decisive whether or not instructions are given in reality, but it is critical if the Dutch entity formally can give instructions. In other words, should the employee follow instructions or directives given by someone representing the Dutch entity (e.g. reporting line, supervision).

Are advantages and disadvantages for the benefit or account of the Dutch entity?

Yes

No

The answer is "Yes" if the Dutch entity is responsible for the result, whether positive or negative, of the working activities performed by the employee.

Are salary costs, directly or indirectly paid, by the Dutch entity?

Yes

No

Salary costs means payment of (regular) salary, pension and social contributions. The sole payment of some local expenses, such as housing and travel, does not qualify as salary costs in this context (i.e. no "remuneration" as meant in the tax treaty). If the foreign company (formal employer) oncharges the salary costs, the Dutch entity is considered to indirectly pay the costs provided that the salary are cross-charged on an individualized bases, such as an estimated amount of salary costs per time unit (e.g. day, hour).

Conclusion: no taxation as no economic employership

The employee is not taxable in the Netherlands based on Dutch case law and official guidelines. The Dutch entity does not qualify as material and economic employer for tax treaty purposes.
Note that besides personal tax implications, there could be implications for immigration, social security, labour law, corporate income tax and/or VAT.
If you need further advice, please contact us.

Conclusion: Dutch tax liability due to economic employership

The employee is taxable in the Netherlands for the employment income that is attributable to physical Dutch workdays since the Dutch entity qualifies as material and economic employer. Normally, the formal (foreign) employer has a Dutch wage tax withholding requirement. The Dutch group entity can take over the wage tax withholding requirement.
Note that besides personal tax implications, there could be implications for immigration, social security, labour law, corporate income tax and/or VAT.
If you need further advice, please contact us.